ABA Statement on Fed Vice Chair Barr's Remarks on Bank Capital

“We share Vice Chair Barr’s goal of a safe, sound and resilient banking system, but we are disappointed that he remains determined to push forward new bank capital requirements despite strong evidence that the U.S. banking system is already well capitalized as regulators have concluded. The changes he outlined today fail to adequately consider the negative repercussions from forcing banks of all sizes to hold more capital than is needed to maintain safety and soundness. Higher capital requirements come at a cost to the economy, and regulators have other existing regulatory tools to manage risks including those that led to the recent bank failures.

“The so-called ‘Basel III Endgame’ reforms’ lack of alignment with current financial market risks is yet another reminder of the shortcomings of the international standard setting process, which effectively limits the role of Congress and short-circuits the traditional rulemaking process. These proposed changes are too important not to get as much input as possible.

“The bottom line – these new Basel capital requirements would only make it harder for banks of all sizes to meet the needs of their customers, clients and communities. Policymakers, who consistently cite the breadth and depth of our banking system as a source of strength, have not yet shown that these reforms will preserve that unique banking diversity or outweigh the significant costs to the U.S. economy. We will carefully review the proposed changes with our members once they are released, and we will be prepared to oppose any reforms that will harm the economy and are not necessary to maintain the safety and soundness of the banking system.”

---

LEARN MORE: ABA today also published a blog post on bank capital reforms co-authored by ABA SVP Hugh Carney, who appeared on a panel following Vice Chair Barr’s remarks this morning at the Bipartisan Policy Center, and ABA SVP Hu Benton.